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As far as the stock market goes, sentiment has not yet reached a peak. There are still a lot of what I call the "wise naysayer" on CNBC and elsewhere, claiming

As far as the stock market goes, sentiment has not yet reached a peak. There are still a lot of what I call the "wise naysayer" on CNBC and elsewhere, claiming that we are due for a big decline, or even a crash. Until there are no naysayers left, the chances of further climbs is supported by sentiment analysis.

deleted 9y ago
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lend000 9y ago
I love that this comment was down-voted because it so ironically conveys how accurate sentiment analysis is -- i.e. the masses reject it.
- hellofunk 9y ago
  Exactly.
danmaz74 9y ago
In every single crash I know of there were lots of naysayers up until the actual crash. As a matter of fact, right after each crash I personally remember, there were some of those naysayers who got elevated to oracle-status by the press for a time, "the one who had foreseen this all". But they always failed to predict the timing of the next crash, so oracle-status didn't last. Bottom line: still having naysayers isn't a relevant signal. Predicting that there will be a crash is easy (you are almost guaranteed to be eventually right). Predicting WHEN the crash will be is (almost?) impossible.
jgalt212 9y ago
I agree stocks are rich/richish by most metrics, but still cheaper than bonds/real estate. And the latter have very strong negative correlation to the level of interest rates. Plus, private equity is sitting on close to $1T of dry powder. That's a pretty strong back stop to stock prices. In short, to avoid the crash you need to figure out what causes mass PE withdrawal, and get in front of that. https://www.bloomberg.com/news/articles/2017-09-01/why-private-equity-has-963-billion-in-dry-powder-quicktake-q-a https://www.bloomberg.com/news/articles/2017-09-01/why-priva...
- timr 9y ago
  "I agree stocks are rich/richish by most metrics, but still cheaper than bonds/real estate. And the latter have very strong negative correlation to the level of interest rates." Bond prices go down. Yields go up.
  - jgalt212 9y ago
    Yield spreads are at extremely rich levels. happy now?
    - deleted 9y ago
      [deleted]

deleted 9y ago

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lend000 9y ago

I love that this comment was down-voted because it so ironically conveys how accurate sentiment analysis is -- i.e. the masses reject it.

hellofunk 9y ago
Exactly.

danmaz74 9y ago

In every single crash I know of there were lots of naysayers up until the actual crash. As a matter of fact, right after each crash I personally remember, there were some of those naysayers who got elevated to oracle-status by the press for a time, "the one who had foreseen this all". But they always failed to predict the timing of the next crash, so oracle-status didn't last. Bottom line: still having naysayers isn't a relevant signal. Predicting that there will be a crash is easy (you are almost guaranteed to be eventually right). Predicting WHEN the crash will be is (almost?) impossible.

jgalt212 9y ago

I agree stocks are rich/richish by most metrics, but still cheaper than bonds/real estate. And the latter have very strong negative correlation to the level of interest rates. Plus, private equity is sitting on close to $1T of dry powder. That's a pretty strong back stop to stock prices. In short, to avoid the crash you need to figure out what causes mass PE withdrawal, and get in front of that. https://www.bloomberg.com/news/articles/2017-09-01/why-private-equity-has-963-billion-in-dry-powder-quicktake-q-a https://www.bloomberg.com/news/articles/2017-09-01/why-priva...

timr 9y ago
"I agree stocks are rich/richish by most metrics, but still cheaper than bonds/real estate. And the latter have very strong negative correlation to the level of interest rates." Bond prices go down. Yields go up.
- jgalt212 9y ago
  Yield spreads are at extremely rich levels. happy now?
  - deleted 9y ago
    [deleted]